Parent PLUS Loans

Federal PLUS loans are intended to help families pay for college expenses. Parents, in particular, can take out low-interest loans in order to help their children pay for school. With a Parent PLUS loan, parents can borrow directly from the federal government and receive a lower interest rate than they might from a bank or another lender.

The biggest difference between a Parent PLUS loan and a Perkins Loan or a Stafford Loan is that there is no deferral period. While it is not necessary to make payments on other federal student loans until you leave school, repayment for a Parent PLUS loan begins immediately. Because your parents are responsible for the loan, they are also responsible for the repayment, starting sixty days after you receive the loan. There are several different repayment plans for PLUS Loans, including income-sensitive payments, payments over ten years, or payments over 25 years. The interest rate for a Parent PLUS Loan is currently fixed at 7.9 percent, which is higher than other federal student loan options. PLUS Loans are also subject to a loan origination fee.

There is no limit on the amount of money that can be borrowed with PLUS loans for parents; instead, the amount you're able to borrow is based on the total cost of attending college, less the financial aid you have already received. However, you cannot borrow more than the difference between the cost of your education and your financial aid. To apply for a Parent PLUS Loan, parents must complete a PLUS application and a master promissory note. The PLUS application is available through most schools. In order to qualify for the loan, parents must pass a credit check and the student must be enrolled in school at least half-time. While the Free Application for Federal Student Aid (FAFSA) is not necessary for a Federal PLUS Loan, most students will need to complete it in order to determine the other financial aid they are eligible for.

If you and your parents do not qualify for a Federal PLUS Loan, you may be able to bring in an alternative endorser — someone willing to make the payments for your loan in the event that your parents are unable to do so. Some families who do not qualify for Parent PLUS Loans can apply for additional loans through the Stafford Loan program.